India's economic growth is being hampered by a lack of political will, a widening fiscal deficit and a moribund power sector, World Economic Forum (WEF) chief Claude Smadja said Monday, November 27.
In a hard-hitting speech to the India Economic Summit in New Delhi, Smadja said the jury was still out on the severity of the current slowdown in Indian economic growth.
"Is it the flu or is it a bad cold? Is it a cyclical phenomenon, temporary, or is it something deeper down?" Smadja said, forecasting six percent economic growth for India in the year ending March 2001, compared to the initial government target of seven percent.
The WEF managing director said overall macroeconomic indicators for India -- still among the top 10 performing economies in the world -- were promising, with nearly 30 percent export growth and foreign exchange reserves of $37 billion.
But he also pointed to a decline in foreign direct investment, as well as a "sullen mood" within the Indian business community.
"It is a mood of uncertainty, fear of the future and keeping market shares. I would call it globalizaton anxiety."
Smadja's speech contained some harsh criticism of the government, as he argued India's problems were political rather than economic.
"After nine years of the reform process, there is still not a strong constitution for reforms in the country," he said, adding while reforms were accepted, they were not strongly advocated by the political establishment.
"Contrary to India, China has made economic growth a national obsession. This is still lacking in India.
"India is a typical example of an over-regulated government."
Smadja went on to highlight the damage being caused by India's fiscal deficit, inadequate transport infrastructure and a loss-making, under-producing power sector.
"There is no way India can get to eight or nine percent growth with a combined state and central government deficit of 11 to 12 percent of GDP (gross domestic product)," he said.
"Telecom is a bright spot. I am sorry to say that this is the only bright spot," he added.— (AFP)
© Agence France Presse 2000
© 2000 Mena Report (www.menareport.com)
